And why can large bonuses make CEOs less productive?
Good questions both, why?
Psychology and behavioral economics professor Dan Ariely has been researching these kinds of questions throughout his career. In The Upside of Irrationality he explores the surprising effects of irrationality in our lives -- both negative and positive. Alexandre Duma's The Count of Monte Cristo is a perfect example:
the protagonist, Edmond Dantes, spends many years in prison under false charges. He eventually escapes and finds a treasure left to him by a fellow prisoner that transforms his life. Under an assumed identity as the Count of Monte Cristo, he uses every ounce of his wealth and wit to entrap and manipulate his betrayers, exacting terrible revenge on them and their families. After surveying the human wreckage in his wake, the count finally realizes that he has taken his desire for revenge too far.
What makes us seek justice?
Betrayal or the perception of being betrayed engages our sense of justice. As Ariely writes, people are generally willing to put their faith in others, even people they don't know and will never meet. We get upset when the social contract of trust is violated.
Ariely says, “not surprisingly, the desire for revenge struck many a citizen in the wake of the financial meltdown of 2008.” Rotten tomatoes for bankers, the anger was palpable. Anonymous lawmakers posted angry letters saying, “I don't really want to trigger a worldwide depression (that's not hyperbole, it's a distinct possibility), but I'm not voting for a blank check for $700 billion for those mother fuckers.”
Ariely and fellow researcher Ayelet Gneezy set out to recreate experiment on poor customer service in order to demonstrate whether even a low level of annoyance is enough to make people feel -- and more importantly act -- vengeful. For example, they recreated a basic dilemma, a situation we may encounter daily, and injected a small interruption as the annoyance factor:
Imagine you go to a restaurant and discover that the server make some mistake with the bill -- do you let him know or keep the loot? And what if the server has annoyed you? Would you be even more likely to turn a blind eye to the mistake?
It was truly disturbing that a twelve-second phone call (the waiter took while interacting with people) vastly decreased the likelihood that the participants would return the cash to the point were just a small minority of people made the honest choice.
It's a question that has broader implications than the size of a tip when we become annoyed at a waiter -- a wrong bill affects the restaurant, or hotel, or service provider. We would point out when it's wrong in the unfavorable direction -- when it's more than it should be. What about when it's not, but the staff was difficult during our stay/meal? Would we punish them by saying nothing?
The human levers run as deep as our survival instincts -- punishing betrayal (real and perceived) is rooted in our biology, even when it costs us something.
Revenge and trust are in fact two sides of the same coin. This is why we talk so much about accountability in business. How did we feel when the economy collapsed, when the bailouts were announced? How about when companies merge and immediately after the announcement there are massive layoffs?
Rotten tomatoes for poor performers in 401k plans, or what's left of them?
Having the last laugh
At whose expense?
We see countless examples of revenge for poor customer experiences through blog posts, comments on review sites -- just look at travel sites -- and tweets. If Twitter weren't the network of first recourse, we would probably not see so many companies make their way with customer service accounts there.
But what happens is that we often take it out on the wrong party.
Terrible treatment after a botched hair color at the hairdresser? Then the color specialist makes a mistake on the bill, do we tell the front desk, or do we pay less, thus shorting the salon? How about the tip? Tricky question, isn't it?
Car troubles, spotty mobile phone reception, shoddy big box store service, poor hotel experiences, and the most loved of all -- air travel. Anyone excited about the next flight anywhere is flying First Class. Otherwise the thought is probably focused on some kind of tax to exact airlines for every unnecessarily unhelpful interaction or lack thereof. The airline may extract a higher price, but it's probably the steward who takes the brunt of discontent.
Retaliate against the principal, or just the agent? Ariely's research says we don't distinguish between the two. Which is bad news for companies that are not serious about customer experience in an environment increasingly charged with annoyance and frustration -- both of which lead to a desire for revenge.
There is one thing that takes the sting off revenge -- a sincere apology.
Former colleagues who left the company or were laid off went on to start what became a main competitor to the business and started winning customers over. That is an example of useful revenge. Taking the opportunity missed in one place and bringing it to life in another.
What about social media?
The best way to use the power of creator and publisher is to put it at the service of one's natural gifts. Instead of taking issue with what someone else is doing, when we focus on a better way to enrich the topic through a different point of view, we widen options.
We should learn the art of disagreement early in life, but we don't. But we can become better at strategizing - that is at making useful choices based on time dependent information. For teachers who desire students who just follow the expected path -- how about welcoming the contributions of students who dig deeper and demonstrate there's another way to learning the subject matter?
It takes teaching someone a lesson to a whole new level, and without the need to get upset.
The book is filled with practical examples of every day experiences and behaviors we can reframe and learn from. It even tells us how to edge our bets with the “not-invented-here” bias. Useful especially at work.
Liked this post? More on behavioral levels in What Really Affects Behavior?